Feature

Barron's 500 Bargains? Perhaps

Here's a look at the cheapest stocks among the Barron's 500, based on price/earnings ratios and current-fiscal-year earnings. Last year's cellar dwellers produced boffo investment returns in future months.

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The Barron's 500 does a good job of highlighting companies with strong financial performance, but it doesn't predict how they'll do in the future, or how their shares will perform. To separate the rich shares from the cheap, we asked FactSet last year to re-rank the 2012 list by price/earnings ratio, based on earnings estimates for each company's current fiscal year. We then highlighted the 30 cheapest stocks, and tracked their performance in the ensuing 12 months.

Scanning the Markdowns

If past is prologue, some of the lowest-P/E shares on our list could deliver rich investment returns.

Company/Ticker

P/E

Barron's 500 2013 Rank

PBF Energy/PBF

5.6

57

Goodyear Tire & Rubber/GT

5.7

397

Barrick Gold /ABX

5.8

370

Hewlett-Packard/HPQ*

5.9

394

Delta Air Lines/DAL

6.5

237

Western Digital/WDC**

6.6

3

Seagate Tech/STX**

7.0

9

Western Refining/WNR

7.1

23

HollyFrontier/HFC

7.1

24

Exelis/XLS

7.2

444

CF Industries/CF

7.3

58

MetLife/MET

7.4

409

Lincoln National/LNC

7.4

71

Valero Energy/VLO

7.5

109

Marathon Petroleum/MPC

7.5

97

Prudential Financial/PRU

7.6

332

R.R. Donnelley/RRD

7.7

407

Xerox/XRX

7.7

177

Pilgrim's Pride/PPC

7.7

232

Jabil Circuit/JBL***

7.7

67

Aegean Marine Pet/PCTN

7.8

395

Insight Enterprises/NSIT

7.9

306

Phillips 66/PSX

7.9

345

Apache/APA

8.0

461

Ingram Micro/IM

8.2

271

Delek US Hldgs/DK

8.3

25

Freeport-McMoRan C&G /FCX

8.3

396

Reinsurance Gp of Amer /RGA

8.4

209

Unum/UNM

8.5

314

United Cont Hldgs/UAL

8.6

476

* Fiscal year ends Oct. 2013. ** Fiscal year ends June 2013. P/E based on current fiscal year. ***Fiscal year ends Aug. 2013

Refiners' shares corrected this spring as the price difference between crude oil and refined products narrowed. As a result, earnings are expected to plateau or fall slightly in 2014. But the selloff might have run its course. These companies remain profitable, often pay nice dividends and are inexpensive.

PBF, which came public late last year, saw its shares fall from a high of $42 in March to a recent $29. Yet analysts still see the company earning $5.69 a share this year and $5.57 in 2014. Shares yield 3.8%. Roger Read, a senior analyst at Wells Fargo, rates PBF Outperform and thinks the shares are worth $44 to $46.